Apple entering Buy Now Pay Later industry: rival Affirm not worried (so far)

Just a couple of days ago, during Apple’s WWDC 2022 keynote, the Cupertino company announced a new option to pay with Apple: Apple Pay Later. The service will come with iOS 16 in the fall for users in the US. This feature allows you to pay in four installments over six weeks without paying interest or fees. Affirm, a financial technology company that provides loans and Buy Now Pay Later services is then one of Apple’s rivals in this category. However, as Bloomberg reports, the CEO of the company, Max Levchin, says he’s not worried.

Affirm CEO is not worried about Apple entering the Buy Now Pay Later industry

Max Levchin stated that his company offers more extensive and longer-term plans, while Apple will be offering to stretch installments over at most six weeks. Affirm’s CEO stated there’s a lot of room for growth for all involved, and also underlined that the Buy Now Pay later option is used for fewer that 5% of US transactions. Affirm’s lending plans go from six weeks to 60 months. Levchin also stated that Apple’s new service might actually be a “nice tailwind” for Affirm, given the fact that it informs more people about the possibility to buy something now and pay later, and that there are companies that provide such services.

However, Affirm’s Levchin actually thinks to hire more engineers, and is gearing up for growth.

Well, apparently not everyone thinks like Levchin:

Recently, another Affirm competitor, Klarna, reportedly has plans to eliminate 10% of its staff. It seems we will have to see whether or not Apple is a threat to companies offering Pay Later services.

Apple’s Pay Later service could potentially be risky for your financial situation, proceed with caution

It’s not only competitors that the new Apple service might affect. Rajat Roy, associate professor at Bond Business School warned that there are reasons for concern for Apple’s Pay Later (via 9to5Mac). And those who should be concerned and proceed with caution are actually consumers.

He noted that Apple might not take any interest, but it will still make money from the service, most likely from fees taken from merchants who want to offer the service. And, on top of that, younger people and households with lower income could be tempted to buy things that they can’t afford. On top of that, this could become worse over time and could make people go into dept.

Roy also mentioned that Buy Now Pay Later services present a risk for the financial health of the mentioned above groups. The professor underlines that it could have a potential impact on your credit rating, in case you miss any payments.